Comments on: Canadian Bank Regulator Tightens Credit, As The Household Debt Risk Emerges Again

By: Kate

Kate — Fri, 18 Jun 2021 13:22:01 +0000

In reply to Ashley. I just wander how to achieve it in such unstable environment.

By: Average Man

Average Man — Fri, 18 Jun 2021 05:03:35 +0000

In reply to Ashley. That's unhinged.

By: Paul

Paul — Thu, 17 Jun 2021 22:55:00 +0000

In reply to Party on. Thank you for posting this. If you google the same “type” of stat mostly you come up with a number hovering around 100% which we all know is impossible.

By: Ashley

Ashley — Thu, 17 Jun 2021 21:28:22 +0000

Very soon someone from one of the banks will come up with a story how debt is not that bad, things are totally under control and people should buy up condos as people are dying to return back to office and will scoop up every unit available.
The other days an economist from CIBC was suggesting people should have atleast 4 real estate assets: a family house, a condo close to work, a cottage for family trips and an investment property.
Why would debt be a bad thing 🙂

By: Sam

Sam — Thu, 17 Jun 2021 17:28:01 +0000

Let me get this straight. BOC lowers DSB so Banks can lend to bolster the economy to get through the pandemic. Money was supposed to finance manufacturing, start-ups etc….things that would allow companies and organizations to innovate and grow providing good jobs and good taxable economic activity during what would otherwise have been a stultifying downturn.

Instead, the banks capitalized on the insatiable housing hunger brought on by the BOC’s other initiative, dangerously low interest rates. The Banks made large…better than even before the Pandemic while household debt skyrocketed, even more than before the pandemic. Other than real estate, no other industry really felt the benefit of this activity.

Is this a better outcome than if the BOC kept the interest rate around 2.5% – 3% and didn’t lower the DSB? Just asking.

By: Matt

Matt — Thu, 17 Jun 2021 16:40:26 +0000

Why 2.5% instead of 2.25%? It seems almost trivial when discussing numbers this large. Can they raise the ratio again if they need to?

By: Trader Jim

Trader Jim — Thu, 17 Jun 2021 16:39:24 +0000

In reply to Kate.

I believe they might be referencing this situation, where banks were sitting on excess capital. If that’s the case, it would confirm they talk to the banks before making decisions like this, to make sure they can handle it. aka regulatory capture.

https://financialpost.com/fp-finance/canadian-bank-dividends-coming-unheard-levels-excess-capital

It is very curious they raised it to 2.5% instead of 2.25% though.

By: Tom Wolfe

Tom Wolfe — Thu, 17 Jun 2021 16:23:30 +0000

In reply to David Reiss. Well Jesus, someone is finally saying what I have been saying since the rail closures before the pandemic. We have been f*cked for a long time now.

By: Kate

Kate — Thu, 17 Jun 2021 16:21:11 +0000

In reply to Omar. Where can I read more about this?

By: Party on

Party on — Thu, 17 Jun 2021 16:20:32 +0000

The following numbers are from the Bank for International Settlements (BIS) Total credit to the non-financial sector (core debt), % of GDP (as of the end of the 4th quarter, 2020) Greece – 345.6 Canada – 359.7 https://stats.bis.org/statx/srs/table/f1.1 The following BIS chart shows Canada’s total credit to its non-financial sector (core debt), as a percentage of its GDP from 1990 to the end of the 4th quarter of 2020: (At the end of 2006 it was 219) https://stats.bis.org/statx/srs/tseries/CRE/Q.CA.C.A.M.770.A?t=f1.1&c=&p=20204&i=6.10